AeroVironment stock down 10% on Q4 earnings miss

The stock price of AeroVironment (AVAV) plunged about 10% after the bell as the Q4 earnings failed to meet estimates. The drone maker’s stock has been volatile over the last 12 months with the stock down about 9% in 2019. To put things in perspective, the stock eclipsed $120 mark in September last year and it has lost 50% when we consider today’s trading level of $62.

Revenue saw a 23% drop from last year primarily due to weakness in product sales. However, Q4 revenue of $87.9 million came ahead of analyst expectations. But on the earnings front, the company’s EPS came in at 24 cents, missing estimates by 2 cents.

For the Q4 period, analysts were expecting a muted performance compared to prior year levels. Revenue is expected to drop 30% to $82.44 million and EPS to come in at 26 cents compared to 77 cents reported last year.

Backlog at the end of April month stood at $164.3 million, which is flat compared to the prior year period. However, sequentially it has improved from January end level of $132.5 million, which is a good sign for investors.

When it comes to fiscal 2019, AeroVironment reported better-than-expected results. The top line grew 17% while earnings more-than-doubled to $1.97 per share. The street was anticipating revenue to improve 14% to $308.75 million and earnings touching $1.75 per share.

Solid Fiscal Outlook

The company is optimistic about the upcoming fiscal year. Revenue for the upcoming fiscal year is expected in the range of $350-370 million and adjusted EPS of $1.47-1.67.

When it comes to estimates, the top line is forecasted to grow 14% crossing $350 million mark and EPS of $1.61. Today’s revenue outlook was at the lower end of the firm’s guidance while earnings come within the guided range.

Commenting about the results, CEO Wahid Nawabi said: “We continue to transform AeroVironment to compete effectively into the future and are poised to build on our momentum in fiscal year 2020 and beyond.”

Kratos Alliance

Last month, AeroVironment joined hands with Kratos Defense & Security Systems (KTOS) to develop unmanned solutions to operate in a near-peer denied combat environment. This would help the defense forces to launch drones from the flying aircraft carrier remotely. It’s expected to come in handy for the US military to fly in the denied airspaces where manned aircraft would not be safer.

Investors would be expecting more update from the management on how this partnership is going to shape up in the next fiscal year and how this would be accretive to earnings in the near future.

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